Looking for input from people with lots of experience in real estate, finance, economics, etc.
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What are the most common mistakes that home buyers make?
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Buying a house in a poor location because it is a "bargain." Next to a busy street, hopeless curb appeal, backed up to some apartments, etc.
Buying the biggest house on the block.
Buying the nicest house on the block.
There's an old saying that goes something like "You don't make money in real estate when you sell...you make money in real estate when you buy."
In other words, buy the right property, at the right price, and you will always be "in the money."
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Mistakes: location, location, location. [traffic, school rating, ameneties needed]
Buying without sufficient down payment
Negotiating asking price
Checking with utilities for operating costs
Understanding/prepared for clsoing costs
Settled to live there/meeting needs a minimum of 5 years
Reject a house based on ugly decor; paint is a cheap fix, appliances
Not having house vetted by a qualified inspector for infrastructure; meets code, roof, electrical, furnace/heat ducts, plumbing, gutters, slope, upgrades/remodel on permit
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When the housing bubble burst a few years back, I kept seeing interviews of people boohooing because their mortgage had increased so much. Then the mention how much the house had cost, many times around $500,000 and they made a salary of $80-120,00/year. Did these people not have brains. What makes them think that on that kind of salary they could afford a house that expensive? But they believed the banker/loan person that they could afford it and that the variable rate wouldn't go up, and they had no idea what they signed, etc. Sorry, but I had no empathy for them, sympathy for their plight maybe, but they walked into the mess with blinders on.
To buy a house, figure out how much you can afford, including yearly maintenance, lawn care, taxes (that can an do go up yearly - I lived 4 years in a house that by the time we sold it the monthly tax amount of the mortgage had gone up $100 in those 4 years!)etc. After figuring out what you can afford, then deduct another 5-10% for the things you forgot or didn't know about. Then calculate how much you have for the down payment to avoid the PMI and to keep your monthly bill lower, and figure out how much you know you can afford. This is not a number that the bank can tell you. You have to know it for yourself. If you make $80,000 and think you can afford a $500,000 home, then think again. It just isn't possible. It is right up there with fast and easy ways to make $1000/week on line for a just a couple hours of work a month!
Educate yourself on all aspects of house buying. Don't let someone lead you around by the nose, including a spouse who is certain you can afford it!
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